Law:

Section:

Section 37(1), read with section 69A, of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1971-72 - Whether assessee-firm, which was engaged in business of smuggling gold, would be entitled to business loss/deduction in respect of addition made consequent on seizure of gold under section 69A - Held, yes FACTS The customs officers confiscated gold biscuits, recovered from the possession of one of the partners of the assessee-firm. The value of the gold biscuits, viz., Rs. 42,000, was treated by the ITO as income of the assessee from undisclosed sources and an addition of the same was made under section 69A. The assessee claimed deduction of the aforesaid amount as a trading loss under section 37, but its claim was rejected all through up to the Tribunal. On issue of a writ of mandamus by the High Court, the question was referred to it. HELD Following the decision of the High Court in CIT v. Piara Singh [1972] 83 ITR 678 (Punj. & Har.)which was upheld by the Supreme Court, it was to be held in the instant case that the confiscation of gold amounted to loss which sprang directly from the carrying on of the business of gold smuggling and, thus, the assessee was entitled to deduction under section 37. The Tribunal was not right in holding that the addition made under section 69A could not be allowed deduction as a business loss. CASE REVIEW CIT v. Shri Ram Chander [1986] 159 ITR 689 (P&H) and CIT v. Piara Singh [1980] 124 ITR 40 (SC) followed & relied upon. CASES REFERRED TO CIT v. Piara Singh [1972] 83 ITR 678 (Punj. & Har.), CIT v. Ram Chander [1986] 159 ITR 689 (Punj. & Har.) and CIT v. Piara Singh [1980] 124 ITR 40 (SC). S.S. Mahajan for the Applicant. L.K. Sood for the Respondent. JUDGMENT Mital, J.-On a mandamus issued by this Court, the Tribunal, Amritsar, has referred the following question: "Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the addition under section 69A of the Income-tax Act, 1961 on account of value of gold biscuits worth Rs. 42,000 seized by the customs authorities cannot be allowed as business loss?" 2. The assessee was carrying on…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492